TPG picks up AT&T’s linear video business for… $8 billion

by itrippledmyself

Unpaywalled coverage

www.cnbc.com/2021/02/25/att-to-spin-off-directv-att-tv-now-and-u-verse-into-new-company.html

8K:

www.sec.gov/ix?doc=/Archives/edgar/data/732717/000119312521056922/d544248d8k.htm

Not much to pull apart here, but I will, because I love a good TPG faceplant. So, the valuation which is, apparently more than DISH? All of dish. Including Sling and 5G assets. I’ve been thinking dish is undervalued, myself. But maybe I have more faith in Charlie’s 5G than everyone else.

So my first thought is that TPG is TPG-ing again. I can’t possibly imagine how they came up with that number. AT&T also gets 4.25 billion of Jr preferred units with a 6.5% PIK. Not a PIK toggle. TPG’s contribution is 1.8bil which has them levered less than 5:1 by my back of the napkin math. Is this a good business? Because that’s what you would commit to a good business, not a dying one. Am I missing something about linear TV?

I think this is good for AT&T in terms of spectrum auction financing and just… getting rid of the business unit, albeit slowly. They need cash for the 5G auctions.

Without splitting out revenue for DTV, but given that it’s losing subscribers like they’re fleeing the Titanic, I’m going to assume it’s not doing especially well. And it really shouldn’t be, because it’s a bad service, in my subjective opinion (as someone who has cancelled it). Maybe losing just a tiny bit of money?

I’m sure the new entity will report up. But I think this is a step in the right direction for T, and I’m glad they found a buyer. Nevertheless if TPG wants your assets, you can assume your assets are crap.

I’m sure there’s more analysis to come, but as someone who has been hoping for a debt reduction at AT&T, I’m happy. And as I said I love a good TPG faceplant.

 

Disclaimer: This information is only for educational purposes. Do not make any investment decisions based on the information in this article. Do you own due diligence or consult your financial professional before making any investment decision.

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